Are NFTs For Me?

by Gabriella Muttone

Gabriella Muttone is an Italian/Canadian/American portrait photographer and photographic artist recently relocated to the south of England. She studied fine art and photography at the prestigious Ontario College of Art and Design University in Toronto. Her photographs have appeared in fashion and lifestyle magazines as well as being a featured photographic artist at MOPA San Diego and The Houston Center of Photography exhibitions. Gabriella’s boudoir images have won silver accreditation at a recent international Portrait Masters competition. Gabriella’s work focuses heavily on the female form and portraiture. Her visual stories are inspired by her own experiences encompassing the many challenges and triumphs as a woman and a woman photographer of this era.

The NFT marketplace has inspired Gabriella to learn how to work with technology responsibly for an additional avenue on her journey forward to share her art and her unique creative voice with collectors worldwide.

Photos by Gabriella Muttone

As I start my journey on creating my next personal body of work, I am thinking about whether I should create it as an NFT art series. I can say without a doubt that as I start this article I know very little about NFTs. Nothing really, other than that they exist, that there is a lot of buzz and a lot of money attached to some of them and that one of the most reputable art auction houses, Sotheby’s, launched it’s first ever NFT art sale in April 2021 with a digital artist known only as PAK, that generated 17 million dollars of revenue.

What is this thing with all this hype that is so confusing to grasp? This thing that incorporates many varieties of digital content including digital art? Is this digital marketplace really a viable investment platform for artists and collectors or is it all just an over inflated hype bubble that will burst into nothing? What is this thing that is unlike anything I have ever known? And how will I do it? Should I do it?

As I start to research the answers to my questions I become even more intrigued and decide that the only way to truly know if NFTs are for me is to actually create my own NFT collection and to put it up for sale. All right then, I am doing it.

So where do I start? I think I had better get an understanding of what an NFT actually is first. NFT stands for Non-Fungible-Token. OK, so what does non-fungible mean? Fungible means replaceable, thus non-fungible means nonreplaceable. And token is the unique cryptographic asset on a blockchain that cannot be replicated, changed or removed. Attaching a token to my artwork will enable it to be bought and sold as a unique digital asset on a digital marketplace with a digital wallet on a blockchain. More on digital marketplaces in just a bit.

What is a blockchain? One definition I came across states that “blockchain is essentially a digital ledger of transparent decentralized transactions powered by miners that run nodes (computers) with gas to include tokens such as NFTs which require smart contracts to verify their authenticity on a blockchain which is distributed across the entire network of blockchain computer systems" . Phew! What? Basically a blockchain is a secure digital public ledger of transactions.

Ahhhh, ok, I think it is starting to make some sense to me but all these new words and terminologies are hard to understand and wrap my brain around. I have created a glossary of terms with simple definitions at the end of this article that may be helpful if you are also having this problem.

So let’s carry on shall we. Now, I understand that by attaching my artwork to a non-fungible-token on a blockchain, I am attaching a unique certificate of scarcity, verification and ownership, or rather a smart contract, to my artwork that cannot be replaced, reproduced or removed. When someone buys my NFT they own that certificate that gives them the right to share a visual digital representation of that artwork . It is theirs to keep or they can resell it. And because a buyer is not the creator they are not the copyright holder. And just like in the real world of physical prints, only I, the creator, can reproduce the artwork. Yes, that is correct, I can reproduce a different NFT, just like I would make another print, from the same artwork which will have a different unique certificate of scarcity verification and ownership attached to it. Cool. Another sweet perk to being the creator is that I can choose to include a royalty tax in the smart contract which will give me a percentage of the sale every time it is resold to another buyer in the future. Yes! And, if I wish to sell the copyright to the buyer as part of the smart contract at the time of the sale I can do so. Yet, unless it is a very big payoff, it is generally always best to retain your copyrights. To sum up just a bit, an NFT will always be verifiably unique and scarce. Once it is minted it can never be replaceable, reproducible or removable from the blockchain. Since one NFT can never be confused with another, this is very desirable and of great value to collectors.

Sotheby’s website states that “they (NFTs) allow for online assets to have verifiable scarcity and ownership that cannot be manipulated. The NFT not only provides collectors with novel assurances of scarcity and ownership, but exposes them to the unique features with which technology can endow artwork” .

Fabulous, right? Now, let’s move on to the NFT marketplace. I will need to choose a marketplace on which to sell my digital photographic artworks for collectors to buy. There are a number of marketplaces to choose from. Each with its’ own look, requirements and limitations. Different marketplaces will have different file size and file type limitations, so be sure to check that your chosen marketplace will work well with your chosen e-wallet and that it is the ideal marketplace to host your artwork. I chose OpenSea as my marketplace and MetaMask as my e-wallet. They connect well with each other. I am thrilled that OpenSea offers me lazy minting since I do not want to spend money upfront to mint my tokens but rather, I wish to defer the costs to the buyer at the point of sale. I won't actually store NFTs or cryptocurrency in my e-wallet. Instead, my ewallet provides me access to my digital assets which all exist on a blockchain. It does so by providing a private secure key to that address, which allows my e-wallet to authorize transactions.

Now, once I have my series created, I will post it upforsaleateitherasetfixedpriceorforauction. I can choose to allow the buyer to download a copy of the file or other material through a link. I add a title and description and choose what percentage of royalties I wish to claim from each future sale and push 'Create' . That’s it.

I wonder why all this digital currency and digital asset stuff started to begin with? We have a working group of currency and trading networks already in place … don’t we? Is the decentralized digital network better and the way forward? A bigger discussion for another time. But I must say, from what I have researched, decentralization itself is nothing new. I believe there are pros and cons to both decentralization and centralization in any network. The ideology of decentralization for transparency, security, speed and the distribution of power to everyone instead of one localized central network of authority has it pros and cons. In a perfect world it would be wonderful if any system would eradicate fraud and theft and misuse, but there seems to always be those that will try and find a way to corrupt the intrinsic ideals of any system. We are human after all.

Another topic of concern worth discussing sooner than later is how NFTs impact our environmental health. Just one single NFT transaction requires more energy than over 100,000 credit card transactions. Wow. But the processing for mining and certifying NFTs is changing quickly with newer and better protocols in development to decrease the amount of computer energy required. There is a need for a greener way moving forward.

I now know a lot more about NFTs and how they are created. Do I feel that there is a place for me in the NFT marketplace? Are NFTs for me? Yes, I think so. And yes, I see this all as a viable investment platform for both artist and collectors. But I strongly believe that I need to do my best to participate in a responsible manner.

I will photograph and create my NFT series by hand, one at a time with traditional digital photographic applications and without the use of code generated quantities in the thousands. I will share my results in my next article. Yes, let’s see what happens next in my NFT journey, shall we?

There is so much more to NFTs than I had imagined. And I am fairly certain there will be much more to come and that they are here to stay.

Glossary

NFT: Non-Fungible-Token, a unique cryptographic token that cannot be replicated.

Digital Asset: electronic files of data that can be owned and transferred by individuals.

Cryptocurrency: is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.

Ethereum: a decentralized blockchain platform that establishes a peer-to-peer network that securely executes and verifies application code, called smart contracts.

Digital Wallet: also known as an e-wallet is an electronic device, online service, or software program that allows one party to make electronic transactions with another party bartering digital currency and units for goods and services.

Marketplace: online platforms for both sellers and buyers.

Minting: the process of recording and verifying the legitimacy of digital transactions on a blockchain. Crypto minting uses a Proof of Stake (PoS) protocol.

Mining: the process of recording and verifying the legitimacy of digital transactions on a blockchain (a digital public ledger). Crypto mining uses a Proof of Work (PoW) protocol.

Lazy Minting: the minting process is pushed forward until someone actually purchases a token.

Proof of Stake: uses randomly selected miners to validate transactions and is the newer form of cryptographic proof in which one party (the prover) proves to others (the verifiers) that a certain amount of a specific computational effort has been expended.

Proof of Work: (PoW) uses a competitive validation method to confirm transactions and add new blocks to the blockchain and is the original form of cryptographic proof in which one party (the prover) proves to others (the verifiers) that a certain amount of a specific computational effort has been expended.

Smart Contract: programs stored on a blockchain that run when predetermined conditions are met.

Blockchain: a digital public ledger of transactions that is duplicated and distributed across the entire network of computer systems that records information in a way that is difficult or impossible to change, hack, cheat or remove.

Miners: participants that use hardware to run algorithms on specific software to verify transactions on the blockchain and add those transactions to the public ledger.

Nodes: can be compared to small servers that store blocks of data. All the nodes are connected to each other and they continuously exchange the newest information on the blockchain with each other.

Decentralized Network: in a decentralized network, anyone can participate and transact on the ledger that run and are powered by a distributed network systems that run and are powered by distributed network servers.

Centralized Network: in a centralized network, only known and identified parties can transact on the ledger that is run and powered by a single network server.